Customs, Excise and Gold Tribunal - Bangalore
The Commissioner Of Central Excise ... vs M/S Mannamplackal Rubber Latex Works, ... on 17 July, 2001
Equivalent citations: 2001(133)ELT371(TRI-BANG)
ORDER
Shri S.S. Sekhon
1. The Respondents are manufacturing Latex Based Adhesives with Brand name 'Support (LC)' 'Super Set (LB)' and were issued a Show Cause Notice proposing to deny duty exemption by classifying them as prepared Adhesive under CETA Heading 3506. The Commissioner decided, relying on the Rubber Board Test reports, that the products are only "rubber latex" and the processing undertaken will not change the classification from heading 40.01 or the entitlement to exemption under Notification 18/95 dt 16.3.95 therefore the entire demand was not sustainable.
2. Revenue has filed the appeal on the grounds-
"1. M/s MRI have themselves accepted in their statement that both the products are adhesives used in the manufacture of footwear and that they are sold as adhesives.
2. The classification is to be decided based on the "end use" of the product and the impugned products are solely used as "adhesives" which fact has been confirmed by one of their customers. M/s MRI have declared that the products as "adhesives" in their sales tax records and it is obvious that they are known only as adhesives in the market.
3. Further, M/s MRI have claimed that the substances added to latex during the process of manufacture are only in the nature of preservatives. It is a well-known fact that a preservative should retain the original property of a product. It can further be noted the latex as it was before the process cannot have such a property so as to give a stronger bonding quality as required in the manufacture of chappals. Hence it is explicit that the process yields a different and distinct product. Therefore, M/s MRI cannot rely on chapter note 5(b) under chapter 40- to classify the impugned goods as "latex rubber."
4. Harmonised System of Nomenclature (HSN), under chapter heading 4005 states that "this heading covers compounded rubber which is unvulcanised and is in primary form in plates, sheets or strip." The very fact that die impugned goods are not in the primary form excludes them from the Chapter. Moreover, Chapter Notes 3 and 9 of Chapter 40 clearly indicate that the Chapter deals with rubber and articles thereof and not with glue or adhesives with rubber base.
5. Considering the process of manufacture; presence of the chemical contents, difference in property of latex before and after processing, market, name, name of the impugned products in sales tax records and the Chapter notes as mentioned above, the products "Superset (LC)" and "Superset (LB)" appear to be classifiable under Chapter Heading 3506 as "PREPARED ADHESIVES".
3. We have heard both sides and considered the matter and find-
(a) Mere that the goods are sold as Adhesives is no reason to call for classification under heading 3506. Latex also has 'bonding' quality and the 'stronger Bonding' quality as urged in ground No 3 of Revenue's appeal have to be proved. It was fairly conceded, by both sides, at the hearing before us, that there is no material to conclude that the processing undertaken on Latex, at the respondents premises result in any 'increase of bonding strength' of the product. In absence of such evidence, we find no validity to conclude that 'Stronger Bonding' is induced in the product to call for classification as proposed in the notice.
(b) Examining the notes, we find note 5 to Chapter 40 of CETA reads-
"5(a) Heading No 40.01 & 40.02 do not apply to any rubber or mixture of rubber which has been compounded, before or after coagulation with iv. XXXXX v. XXXXX vi. XXXXX
(b) The presence of the following substances in any rubber or mixture of rubber shall not affect the classification in Heading 40.01 or 40.02;....."
There is no evidence that the products are excluded by (i), (ii), (iii) of Note 5(a) from heading 40.01, nor can we find any conflict with the Commissioner having ignored the small percentages of substances found on test as per Note 5(b), to hold the product as other than latex and classify the products under heading 40.01.
(c) We therefore, do not find any material, in grounds to find a flaw in Commissioner's Orders and to uphold the Revenue's appeal.
4. In view of our findings, the appeal is dismissed.
(Pronounced in open court on 17/07/2001)